Memo to Duncan Smith: unlike the UK, the US has recovered from recession

The Work and Pensions Secretary is wrong to criticise the performance of the US economy.

It took some chutzpah for Mitt Romney supporter Iain Duncan Smith to declare on BBC Radio 5 Live last night that it was "very worrying" that the United States hadn't "bounced back from this recession". Unlike the UK, the US has more than recovered from the downturn of 2008-09.

As the graph below shows, while the US has grown consistently since leaving recession in the third quarter of 2009 (with the exception of Q1 2011 when output was flat), Britain has only recently returned to growth after three quarters of contraction. Indeed, by one definition at least, we're still in recession. Unlike the US economy, which is now 2.3 per cent above its pre-recession peak, the UK economy is still 3.1 per cent smaller than it was in the first quarter of 2008. Over the last year, while UK output has remained flat, the US has grown by 2.3 per cent.

The divergence in performance is due in no small part to the decision of the US government to pursue stimulus and the decision of the UK to pursue austerity. Barack Obama's $787bn fiscal stimulus, a mixture of tax cuts, infrastructure projects and increased unemployment benefits, is estimated to have increased real US GDP by around 3.4 per cent and to have created or saved 2.7 million jobs (see this study by Mark Zandi, a former economic adviser to John McCain, and Alan Blinder, a former vice-chairman of the Federal Reserve). By contrast, the coalition's (non-expansionary) fiscal contraction is thought to have reduced GDP by 4.3 per cent this year.

Duncan Smith is welcome to invite comparison of the two economies (not least because it aids the case against the government's policies), but he should know that there can only be one winner.

Barack Obama speaks during a campaign rally in Cincinnati, Ohio. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Jeremy Corbyn only made one mistake - he should have taken tighter control of the Labour party

There is no doubt who could, and should, win the Labour leadership contest.

Brexit changes everything. In the weeks and months that come, mountains will move, parties split and seemingly indisputable laws of politics will be torn up. Monday night’s thousands-strong rally in Parliament Square in support of Jeremy Corbyn perhaps marked the end of the immediate period of mourning that has engulfed much of the left – other than in the shadow cabinet, where the result has merely has prompted an out-of-the-box coup attempt. 

We are right to mourn – and not for the price of sterling.  Things which were once said quietly over pints are now displayed on billboards. The bigotry and unpleasantness that characterised the campaign – and the tragic violence that surrounded it – were not random occurrences but a vision of the future.

There has been a mass politicisation of some sections of society, and on the worst terms imaginable. As we prepare for battle against an emboldened and rightwardly mobile Tory Party, we are also coming to terms with the fact that the cleverest and most dynamic elements of the British ruling class have seemingly gained a popular mandate for the idea that immigration is responsible for the worsening of living standards. 

Why Brexit happened

Many of us woke up on Friday in a country we did not recognise, which had rejected so much of what seemed like the future. Yes, the European project was tainted by its lack of democracy and service to corporate interests, but it represented real human and historical progress. It meant integration and the breakdown of national borders. So much of the tragedy of this vote is in the plethora of unknown losses – the connections and shared lives that will, quietly, never happen. 

There is, rightly, a yearning to understand why this has happened. The answer ought to be obvious. In an era defined by the strength and resonance of anti-establishment politics, and a vote in which economically left-leaning voters were crucial, Britain Stronger In Europe – a campaign with strong backing from portions of the Labour right – lined up experts and churned out leaflets featuring corporate bigwigs. Reading leaflets in the final week of the campaign, I half-wondered in exasperation if, next to Tony Blair and Karen Brady, Darth Maul (not even the A-list sith lord) would make an appearance.

Labour’s own campaign was undoubtedly better. But, hamstrung by the doctrine of reaching out to an imaginary centre ground voter, it merely mixed Stronger In’s obsession with economic growth statistics and Britain’s place in the world with rolling coverage of the fact that Alan Johnson used to be a postman. 

The chapter ends

Brexit marks the final end of one narrative of Britain’s future. Both the liberal left and the centrist projects that dominated Labour in the first decade of the 21st century assumed a progression towards an ever opener, ever more socially liberal society. Yet, just as history didn’t end when the Berlin Wall fell, xenophobia and prejudice are not things that belong to the past. From now on, the battle for social attitudes will be an insurgent task, bound up with the ability of the left to propose radical solutions to economic crisis and social disintegration. The only argument that could have stopped Brexit was that austerity and neo-liberalism caused the housing crisis, falling wages and stretched public services – not Romanians and Bulgarians. 

Watching the very same figures, whose preconceptions and lack of imagination lost the referendum, resign and blame Jeremy Corbyn should inspire a mixture of laughter and exasperation. Corbyn’s main mistake was not to take tighter control of Labour’s campaign from the outset – although, of course, had he done so he would have been roundly denounced. Like so many quandaries of the Corbyn leadership, the referendum campaign was characterised by a need for footwork and firefigting within the Parliamentary Labour Party rather than a strategic focus on winning the vote. The Labour right created an impossible situation and are now attempting to exploit the aftermath. If it wasn’t so desperate and irresponsible, it could be described as shrewd.  

What Labour needs

There should be no doubt as to who will win the leadership contest itself. Not only does Corbyn have an overwhelming base of support in Labour’s grassroots – he will, again, have the backing of major trade unions.  Since September, Momentum – a machine built with the explicit aim of defending the new Labour leadership – has formed over a hundred functioning local groups, and mobilised more than 100,000 supporters. The real danger of the leadership challenge is not that the left will lose, but that its instigators might be able to affect a shift in the politics of the party, especially on the issue of migration. 

In lieu of analysis, a number of placeholder phrases have proliferated on the left in recent days. For example, that it’s not racist to talk about immigration, and that we cannot brand working class Leave voters as racist because they are concerned about immigration. On one level, these phrases are obviously true. The problem with them – other than repeating verbatim the Conservative Party general election slogan of 2005 – is that they could lay the ground for turn against freedom of movement in the Labour Party. And while we must listen to voters without judgement, to give ground to the myth that misery and social incohesion are caused by immigrants – however much it may feel true in some places – is to give ground and credence to an idea that will divide and rot the labour movement from the inside out.

Rather than a miserable compromise on immigration, what Labour needs now is a strategy and a set of policies – not just visions and sentiments – to win back the ground lost in the English heartlands devastated by Thatcherism. This should include increased public funding for areas with high levels of immigration and a new deal for democratising the state at a local level. A Labour government must pledge a massive increase in the minimum wage, rent controls, a new programme of social housing, public and workers’ ownership, and a radical redistributive tax system.

The only argument against Brexit that made sense was that social crisis was the result of austerity. In the same way, the only long-term solutions must come from the left.